Enterprise deep tech companies, the only major theme to see increase investment activity in 2017

Enterprise deep tech companies was the only major theme to see an increase in investment activity in 2017 nearly doubling from the 12 in 2016 to 23 in 2017, according to data from Venture IntelligenceRanjani Ayyar | TNN | February 13, 2018, 09:05 IST

Chennai: After all the hype and funds being poured into retail tech, food tech and any other tech companies, 2017 was the year for deep tech or pure tech-related startups. Enterprise deep tech companies was the only major theme to see an increase in investment activity in 2017 nearly doubling from the 12 in 2016 to 23 in 2017, according to data from Venture Intelligence. Investors and industry observers say this is a sign of the startup ecosystem coming to age. Srikanth Sundararajan, partner, VenturEast, a VC firm said, “From 2012 -2016, VC appetite was for models that scale rapidly and build valuations. Deep tech does not lend itself to this. The tech has to be proven and adopted.”

Artificial Intelligence (AI) and big data companies shared 33% of the investments, while security tech companies grabbed 17% of the VC investments in deep tech. The large rounds went to fraud protection company Similty, big data company Flutura and speech recognition company Uniphore, Venture Intelligence data reveals.

Deep tech startups wont attract capital from a typical investor who is looking for returns, says Sundararajan. “The spend and investments in these startups could be less in quantum and investors expect less in terms of achievement when it comes to scale. People understand the runway required for such technologies to succeed,” he said.

Sundararajan adds that for deep tech to be built and adopted in India, there is still some reticence.

IndusOS and Uniphore is among the few startups to have a scripted a deep tech success story out of India. While IndusOS,which has built a regional operating system for phones raised $4 million in December 2017 from existing investors including VenturEast, Chennai-based Uniphore became former Cisco chairman John Chambers’ first investment outside of US.

Flutura Decision Sciences and Analytics, an Industrial Internet of Things company that focuses on machine to machine and big data analytics is another startup that raised funding in 2017. The startup serves clients from manufacturing, energy and engineering industries. Derick Jose, co-founder, Flutura said, “Investors have realized that the greasy area of Industrial AI has huge potential to impact outcomes as compared to Consumer AI which is generally popular.”

While industrial AI has the ability to impact several outcomes, the area needs a new breed of folks who are not just vanilla data scientists, says Jose. “Application of industrial AI needs intimate knowledge of mission critical processes and those who understand both, industrial and deep learning processes,” he said. For instance, Flutura’s work with upstream well operators in Houston required downhole/rotory asset specialists with 15 years of domain experience to pick up data science skills. Industry observers say talent is not an issue for deep tech startups. “ Technology has always been a strong point for us. The challenge is to serve a global market, sitting out of India. Where they need help is business development and product market skills,” Sundarararajan adds.

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